Where does oil leak?

In the nine-months period of 2018, Russian ports of the Baltic Basin decreased oil transshipment by 17.4%, or almost 10 million tonnes. Slight decline of oil transshipment was also seen in the Far East Basin.

Distance and losses

According to Association of Commercial Sea Ports, oil transshipment via seaports decreased by 3.1%, or by 6 million tonnes, to 182.6 million tonnes. Without statistics’ “double count” of Arctic oil transshipped via storage tankers the final result will be about 171 million tonnes with a decrease of 4.7 million tonnes.

The Baltic Basin saw a loss of 10 million tonnes of oil (having plunged by 17.4%, year-on-year). The Far East Basin also saw a decrease, not so sharp though – 0.4 million tonnes (-1.2%).

In the Baltic Basin, the decrease was registered at all terminals. In the Far East Basin, the decline was seen in Kozmino and Prigorodnoye while De-Kastri handling oil from fields developed by Exxon Neftegas saw a slight increase.

Other basins demonstrated a growth of oil transshipment.

In the Arctic Basin, oil transshipment grew by 1.6 million tonnes, or 8.9% (excluding “double count”). The growth was driven by increased transshipment of oil via FSO Nord - by 2.9 million tonnes (+24.2%) while transshipment of oil from Varandei fell by 1.2 million tonnes (-20%). This year, Varandei oil is being transshipped via FSO LK-Volga, offshore transshipment facility in Murmansk.

Even higher growth was seen in the Southern basin – by 2 million tonnes (+3.6%). It should be attributed to the growth of oil transshipment via CPC-R terminal – by 4.5 million tonnes (+11.4%) driven by the CPC expansion. However, oil transshipment via other terminals of the basin dropped.

The growth was also seen in the Caspian basin. Commercial Seaport of Makhachkala handled 2.1 times as much oil as in the same period of 2017 – 1.49 million tonnes (about 0.7 million tonnes more). It is a low base effect – in 2017, a considerable part of oil flow was lost amid scandal involving the port. The flow is recovering now since the port is located close to the largest oil tank farm in the North Caucasus region. Its capacity is 540,000 cbm and it is linked with a Baku-Novorossiysk pipeline with annual capacity of 5 million tonnes of oil.

If we take into consideration that South Basin’s growth was driven by oil transit via CPC and oil from Arctic fields is a local story, the Baltic Basin and the terminals of Novorossiysk, dedicated oil terminals in Kozmino and Prigorodnoye are the key “victims” of decreasing exports from traditional fields.

According to the Institute of Natural Monopolies Research, oil production in 2018 is estimated at 549 million tonnes (+0.5%). Exports will total 255.7 million tonnes (+1.2% versus 2017). Supplies to non-CIS countries are expected to grow by 1.2 %, to CIS countries – by 1.9%.

As Dmitry Baranov, leading expert of Finam Management, told IAA PortNews some produces have probably decrease exports of oil in favour of more expensive oil products.

“There is some time before the end of the year and oil exports can increase, the more so as winter begins and more fuel, including oil, can be needed. The ports will be important points of liquid bulk cargo transshipment and current decrease of oil transshipment is just an episode that will not affect their operation and financial situation”, believes Dmitry Baranov.

It should be noted that oil production reduction is being discussed by OPEC+ countries. If Russia supports the reduction the trend of declining exports via key export terminals can continue.

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